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The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management

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  • Howard Gospel
  • Mari Sako

Abstract

This article analyses the demand side of business services outsourcing. Using insights from a number of bodies of literature, the article interprets business services outsourcing as corporate restructuring involving the administrative functions of the firm. Propositions are developed around the following. First, the existing corporate structure and the nature of supplier markets affect the paths chosen to create shared business services and to move to outsourcing. Second, the trajectory of the move to shared services and outsourcing affects the distribution of capabilities between users and suppliers. The study examines these propositions through a comparison of human resource outsourcing in two leading consumer products companies, Procter & Gamble (P&G) and Unilever. We find that a relatively high degree of centralization at P&G led it to create an internal shared services center before outsourcing, whilst a more decentralized Unilever utilized outsourcing as an occasion for globally standardizing its systems and processes. The article draws implications of these different paths for core capabilities. Copyright 2010 The Author 2010. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved., Oxford University Press.

Suggested Citation

  • Howard Gospel & Mari Sako, 2010. "The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(5), pages 1367-1396, October.
    • Handle: RePEc:oup:indcch:v:19:y:2010:i:5:p:1367-1396
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    File URL: http://hdl.handle.net/10.1093/icc/dtq002
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    Cited by:

    1. Jan Drahokoupil, 2014. "Decision-making in multinational corporations: key issues in international business strategy," Transfer: European Review of Labour and Research, , vol. 20(2), pages 199-215, May.
    2. Susan Helper & Mari Sako, 2010. "Management innovation in supply chain: appreciating Chandler in the twenty-first century," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 19(2), pages 399-429, April.
    3. Stephan Manning & Silvia Massini & Carine Peeters & Arie Y. Lewin, 2018. "The changing rationale for governance choices: Early vs. late adopters of global services sourcing," Strategic Management Journal, Wiley Blackwell, vol. 39(8), pages 2303-2334, August.
    4. Bernhardt, Annette & Batt, Rosemary & Houseman, Susan & Appelbaum, Eileen, 2016. "Domestic Outsourcing in the U.S.: A Research Agenda to Assess Trends and Effects on Job Quality," Institute for Research on Labor and Employment, Working Paper Series qt2fm4m444, Institute of Industrial Relations, UC Berkeley.
    5. Richter, Philipp Clemens & Brühl, Rolf, 2017. "Shared service center research: A review of the past, present, and future," European Management Journal, Elsevier, vol. 35(1), pages 26-38.
    6. Sven Kunisch & Markus Menz & David Collis, 2020. "Corporate headquarters in the twenty-first century: an organization design perspective," Journal of Organization Design, Springer;Organizational Design Community, vol. 9(1), pages 1-32, December.
    7. Annette Bernhardt & Rosemary L. Batt & Susan Houseman & Eileen Appelbaum, 2016. "Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," Upjohn Working Papers 16-253, W.E. Upjohn Institute for Employment Research.
    8. Herbert, Ian P. & Seal, Will B., 2012. "Shared services as a new organisational form: Some implications for management accounting," The British Accounting Review, Elsevier, vol. 44(2), pages 83-97.
    9. Richter, Philipp Clemens & Brühl, Rolf, 2020. "Ahead of the game: Antecedents for the success of shared service centers," European Management Journal, Elsevier, vol. 38(3), pages 477-488.
    10. Lewin, Arie Y. & Volberda, Henk W., 2011. "Co-evolution of global sourcing: The need to understand the underlying mechanisms of firm-decisions to offshore," International Business Review, Elsevier, vol. 20(3), pages 241-251, June.
    11. Patel, Charmi & Budhwar, Pawan & Witzemann, Alissa & Katou, Anastasia, 2019. "HR outsourcing: The impact on HR's strategic role and remaining in-house HR function," Journal of Business Research, Elsevier, vol. 103(C), pages 397-406.
    12. Stephan Manning & Silvia Massini & Carine Peeters & Arie Lewin, 2012. "Global Co-Evolution of Firm Boundaries: Process Commoditization, Capabilities Development, and Path Dependencies," Working Papers CEB 12-009, ULB -- Universite Libre de Bruxelles.
    13. Pereira, Vijay & Anderson, Valerie, 2012. "A longitudinal examination of HRM in a human resources offshoring (HRO) organization operating from India," Journal of World Business, Elsevier, vol. 47(2), pages 223-231.
    14. Knol, Arjan & Janssen, Marijn & Sol, Henk, 2014. "A taxonomy of management challenges for developing shared services arrangements," European Management Journal, Elsevier, vol. 32(1), pages 91-103.
    15. Lambert, Stephanie A. & Herbert, Ian P. & Rothwell, Andrew T., 2020. "Rethinking the Career Anchors Inventory framework with insights from a finance transformation field study," The British Accounting Review, Elsevier, vol. 52(2).
    16. Kunisch, Sven & Menz, Markus & Birkinshaw, Julian, 2019. "Spatially dispersed corporate headquarters: A historical analysis of their prevalence, antecedents, and consequences," International Business Review, Elsevier, vol. 28(1), pages 148-161.
    17. Paagman, Arnaud & Tate, Mary & Furtmueller, Elfi & de Bloom, Jessica, 2015. "An integrative literature review and empirical validation of motives for introducing shared services in government organizations," International Journal of Information Management, Elsevier, vol. 35(1), pages 110-123.
    18. Annette Bernhardt & Rosemary Batt & Susan Houseman & Eileen Appelbaum, 2016. "Working Paper: Domestic Outsourcing in the United States: A Research Agenda to Assess Trends and Effects on Job Quality," CEPR Reports and Issue Briefs 2016-03, Center for Economic and Policy Research (CEPR).
    19. Martin, Xavier & van den Oever, K.F., 2013. "Progress, maturity or exhaustion? Sources and modes of theorizing on the international strategy - performance relationship (1990-2011)," Other publications TiSEM 656747af-da51-4917-92fd-7, Tilburg University, School of Economics and Management.

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